08 Aug News gets worse for Landlords

You may remember our previous article on His Honour Justice Garde’s decision in VCAT which was handed down on 1 May 2015 which provided, amongst other things, that a Landlord is prevented from passing on the costs of complying with its obligations under:

the Building Act 1993 (Vic) to a Tenant; and

section 52(2) of the Retail Leases Act 2003 (Vic) (RLA) to a Tenant (unless some of the exceptions contained in that section were to apply).

The news seemingly gets worse for Landlords. In a recent decision by Justice Croft in Versus (Aus) Pty Ltd v ANH Nominees Pty Ltd [2015] VSC 515, His Honour held that the obligations of a Landlord of a retail premises lease to repair and maintain the premises under section 52(2) are to be “date stamped” to the commencement date of the original lease. This means that the condition of the premises must be consistent with the condition the premises were in on the date the original lease was entered into, and not the commencement date of any Renewal of Lease.

As a reminder, Section 52(2) of the RLA provides as follows:

“(2) The landlord is responsible for maintaining in a condition consistent with the condition of the premises when the retail premises lease was entered into:

(a) the structure of, and fixtures in, the retail premises; and

(b) plant and equipment at the retail premises; and

(c) the appliances, fittings and fixtures provided under the lease by the landlord relating to the gas, electricity, water, drainage or other services”

*our emphasis added

It has been argued by Landlords in the past that the words “when the retail premises lease was entered into” potentially leaves open the possibility for a Landlord to only repair and maintain the Premises to a condition consistent with the condition at the commencement date of the most recent lease, be it the original lease or a Renewal of Lease. This is no longer the case.

What Landlords should do

Landlords should seriously consider complying with any meritorious requests from a Tenant to maintain the condition of the premises as soon as it receives notification of the same so as to prevent the premises from deteriorating further and potentially leaving the Landlord with an even larger repair and maintenance bill by continuing to delay the performance of such works.

Author – Joshua Kaplan

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